Whichever way you cut it, digital transformation involves change: technology change and business-model change, too. Can your company cope?
One of the issues raised at the recent Digital Insurance Network gathering that intrigued me was the whole question of organizational resilience. Here’s why.
As you would know, and as the previous blogs in this series have intimated, technology available today offer great opportunities for insurers—but they are also blocked by some not insignificant barriers. The point here is that any company that is going to come to terms with digital is facing some significant amounts of change.
Insurance, I would argue, has been around for a long time and has not fundamentally changed that much over this extended time-scale. The basic model remains the same. Partly this is could be because “if it ain’t broke, don’t fix it,” but also, more seriously, insurance is heavily regulated. Regulators don’t much like change.
Consequently, insurance companies are not very used to change. In particular, they may not be very good at getting over the failures that are always a possibility, and frequently occur. If it’s true that the nature of customer demand has changed—and it has—and if it’s true that insurers are going to have to respond much more quickly and comprehensively to changes in customer demand—and I think they will—then the average insurer is going to be generating more new products and services than ever before. Some of them will fail.
This is going to mean developing new relationships with regulators, because what they hate more than change is anything that might affect an insurance company’s ability to cover the risks insured with it.
It also means that the cost of digital transformation has to include funding those initiatives that fail.
In addition, while the new idea is being explored and the change dealt with, the insurer must continue to protect its existing franchise.
So, how resilient is your company?